Sources: BlockFi was among the groups that liquidated at least some positions held by Three Arrows Capital, which failed to meet margin calls this past weekend
Negativity Continues to Plague the Crypto Hedge Fund Anushsamal / Bitcoinist.com : BlockFi Mentions That It Liquidated Three Arrows Capital, Here's What We Know! John P. Njui / Ethereum World News : DogeCoin Co-Founder Hopes the Crypto Community Will Learn from the Failings of Celsius, LUNA and Three Arrows Capital Mark Toon / Protos : Three Arrows Capital liquidated by multiple lenders after ghosting George Georgiev / CryptoPotato : Celsius Drama, 3AC Insolvency Rumors, Bitcoin Amid $20K: This Week's Crypto Recap web3lunch : 🤯 Bitcoin spends 56 times less energy than current monetary payment system Michael Bellusci / CoinDesk : Genesis Trading Mitigated Losses With a ‘Large Counterparty,’ CEO Says Chris Williams / Crypto Briefing : Troubled Crypto Giant 3AC Weighing Asset Sales, Bailout Options: WSJ Jinia Shawdagor / CryptoSlate : BlockFi liquidates major counterparty after it fails to meet margin call Jetdrops / the drops : drop #005: School's out for Summer Danny Park / Forkast : Contagion risk from Three Arrows Capital weighs on Bitcoin, crypto Le Mardi Crypto / La Lettre du Mardi Crypto : La Lettre du Mardi Crypto n°13 The Daily Hodl : Coinbase-Backed Digital Asset Lending Firm Says It Liquidated One ‘Large Client’ Amid Epic Crypto Market Crash Luca Monk / Closingbell Gems : Your Portfolio Is Down 60%. Now What? — A quick EOW note: we published Episode 1 of The Closingbell Show with Alex Morris. Tradernap / Coinmonks : 3AC (3 arrows capital), liquidations, misinformation, problems PYMNTS.com : Today in Crypto: LatAm Exchange Bitso Processed $1B in US-Mexican Remittances YTD; Crypto Hedge Fund Three Arrows Capital Misses Lender Margin Calls Bloomberg : BlockFi Seeks to Quell Fear Amid Fallout from Crypto Hedge Fund Three Arrows Frank Corva / Frank Corva's Newsletter : This Cycle's Cleansing — Every crypto bull market attracts “degens” (crypto speak for degenerates) of all shapes and statures. Ben Giove / Bankless : Is DeFi Ded? — Buy crypto in one step on browser & mobile across 6 different chains with MetaMask! Tweets: @thedefiedge : One of the LARGEST Crypto Venture Capital firms: Three Arrows Capital. They're becoming insolvent. With potentially $18b under management, this could be catastrophic for Crypto. Here's a timeline of what's going on and the possible consequences: ↓↓↓ Zac Prince / @blockfizac : BlockFi can confirm that we exercised our best business judgment recently with a large client that failed to meet its obligations on an overcollateralized margin loan. We fully accelerated the loan and fully liquidated or hedged all the associated collateral. Shibetoshi Nakamoto / @billym2k : assuming we have a new bull run after this crypto winter, could we all collectively learn from the failings of celsius, luna, and 3ac, and y'know, actually listen to people when they call out systemic risks instead of bullying people into silence because it helps short term bags @avalancheavax : Due to recent speculation, we'd like to clarify that 3AC has never in any way managed, used, or custodied any Avalanche Foundation treasury funds. Zac Prince / @blockfizac : I've been seeing a lot of speculation about BlockFi's risk management practices that I want to address. While our policy is to not comment on specific counterparties, we are committed to providing as much transparency as possible, and it's important to know the following: Miles Deutscher / @milesdeutscher : Keep an eye on these assets. These are 3AC's primary holdings. They'll presumably look to dump during upcoming unlocks. https://twitter.com/... Bennett Tomlin / @bennetttomlin : 3AC invested in tons of venture rounds. 3AC identifies themself as a hedge fund on their website. 3AC provided treasury management services for projects they invested in. But hey let's talk misinformation https://twitter.com/... Anthony DeRosa / @anthony : WSJ EXCLUSIVE: Crypto hedge fund Three Arrows has huge losses and is now considering asset sales or a bailout https://www.wsj.com/... Meltem Demirors / @melt_dem : 1/ an explainer on asset liability mismatch and why crypto firms are especially susceptible to this phenomenon due to issues around duration matching and risk management tl;dr the finänce explanation for celsius, 3AC, and many others struggling this is a balance sheet ⚖️ https://twitter.com/... Katie Martin / @katie_martin_fx : “They were really big and really active. They went into some enormous positions” Crypto hedge fund Three Arrows fails to meet lender margin calls https://www.ft.com/... Robert Smith / @bondhack : Who would have thought that buying digital tulips on margin was a bad idea? Great piece on the Three Arrows clusterfuck from @kadhim and @joshckoliver https://www.ft.com/... @thedefiedge : @zhusu @KylesLdavies 3AC Backs Terra Luna Before the Terra collapse last month, 3AC spent $559.6 million to buy Locked Luna. It's now worth roughly ~$670. There is SPECULATION that the massive losses of Luna caused them to use more leverage to earn it back. Also known as “Revenge trading” @theskyhopper : 3AC liquidated. Let's just make it clear. https://twitter.com/... Meltem Demirors / @melt_dem : this is a thread that shows how quickly misinformation in crypto gets amplified 😑 3AC is a PROP TRADING firm, not VC, not a hedge fund. they have NO outside money. therefore, more like Bill Hwang / Archegos. also * lending counterparties* responsible for being way too lax. https://twitter.com/...
Context & Ripple Effects
Three Arrows Capital had already been reported facing an uncertain future after a liquidation exceeding $400 million, while its leadership said it was working through the losses. BlockFi’s reported action identifies a lender acting on that stress rather than merely a fund facing it.
The episode later moved into a formal insolvency phase when a British Virgin Islands court ordered Three Arrows Capital’s liquidation. The sequence matters because missed margin calls translated quickly into collateral enforcement and then a court-supervised process.
First-order effects
- BlockFi liquidated at least some Three Arrows Capital positions after the fund failed to meet margin calls, converting its exposure into an immediate recovery process.
- Three Arrows Capital loses control of liquidated holdings while it weighs asset sales or a bailout to cover losses.
Second-order effects
- Other lenders with exposure to Three Arrows Capital face pressure to assess collateral and enforce their own margin terms, compounding the fund’s need for liquidity.
- Asset-sale or bailout negotiations become harder for Three Arrows Capital once creditors have begun liquidating positions, because the pool of assets available to stabilize the fund shrinks.
Third-order effects
- The progression from missed margin calls to lender liquidations and a court-ordered wind-down points to crypto credit markets becoming more vulnerable to rapid deleveraging when concentrated borrowers fail.
- If lenders continue to rely on swift collateral enforcement during market stress, the sector’s legitimacy gap will increasingly turn on whether those mechanisms protect counterparties without amplifying market dislocation.
The trend: Crypto credit is being tested by how rapidly leveraged borrowers can move from margin stress to creditor-led liquidation and formal insolvency.